Updated: Mar 25, 2022
“We sell tractors. We fix them. We collect the money.”
This was the insight I received from a seasoned iron peddler upon my first visit to an equipment dealership more than 20 years ago. Simple and action-oriented, his statement summed up the fundamentals of equipment distribution. Of course, this model favors dealers who do all three at a high level of consistency while supporting their customers.
But I knew from the first time I heard this statement — and have heard thousands of times since — that something’s missing: Innovation.
Rapid advancements in technology — electrification, automation, robotics, data, communication — make it imperative to not only execute well (sell, fix, collect) and to innovate. This two-part series will explore how the execution and innovation work together in a 2nd machine age dealership.
Peddling Execution & Innovation
My first bike was a white and orange Huffy BMX. Single-speed, coaster brakes and eager to launch off any plywood ramp I was brave enough to ride. The thing was awesome. The problem was that no matter how hard I pedalled, the bike maxed out at about 10 mph. So you can imagine my delight when I finally saved up enough to buy a 10-speed. More gears = more speed.
How does this relate to leadership lessons for your dealership? Well, are you still single pedaling a Huffy or blasting past your competition on a 10-speed?
Consider execution as your left pedal, innovation as your right, and operational excellence (how you run your business) as the gears. All three play equally essential roles in moving your business forward, though none more important than the first gear of process consistency.
Broken or non-existent processes show up as you’d expect: perpetually trapped in firefighting, big swings in month-over-month results, high employee frustration from inter-department conflict, poor customer retention. Many dealers I work with want to improve their processes but don’t know where to start.
So, let’s start with the basics: understanding processes and methods.
Dealership Examples of 2 Process & 2 Methods
For any dealership or any business, there are, generally, two types of processes and two methods by which the processes may be conducted:
Routine processes are frequent, repetitive, can easily be documented and generally produce a known outcome.
Non-routine processes are the opposite. They are performed infrequently, have vague inputs with high uncertainty and ambiguity, and can have a variety of outcomes.
Both processes can employ either cognitive (complex decision making) or manual (physical) work. These typical tasks (see the table below) in a dealership show the differences.
We see that routine processes dominate the work of a dealership. This should come as no surprise. No matter the dealership, the fundamental purpose is to sell, fix, collect.
The competitive difference is how well you execute these processes.
Want to improve your processes? Start here.
Here are 5 actions to consider.
Examine processes that involve two or more departments (or parties). For example, opening and closing repair orders can involve parts, service, wholegoods sales and the customer. The more parties involved, the clearer need to define and communicate the process.
Focus on routine. We saw above that routine tasks and processes dominate. These processes must be smooth and unambiguous. The last thing you want is techs wasting time figuring out how to do a PDI when they could be troubleshooting or innovating for your customers.
Tackle the chaos of non-routine firefighting. Even though you’re pedalling hard, your chain keeps popping off. Poorly defined routine processes inevitably lead non-routine chaos even at the best dealers.
Evaluate which manual routine processes are core competencies vs. those that may be outsourced. Can bolts bin stocking or parts deliveries be done by a vendor?
Take the robot out of the human. Creating real value comes from innovating solutions for your customers, not by repeating the same processes over and over. Many routine tasks can be automated, thus clearing the way for more time and capacity to innovate.
Building a 2nd machine age dealership involves both execution and innovation, and execution starts with clear and consistent processes. It’s time to trade in your Huffy!
This article was first published on farm-equipment.com.